This pandemic can also teach people some hard money lessons they can use to better their finances. If you take these lessons as a learning opportunity, they can help you improve your finances. But if you choose to remain in one corner and sulk, it will keep you down for a lot longer time. The way you use these struggles in life can determine how you bounce back from them.
Just like anything in life, you need to use the challenges you face to your advantage. You can choose to learn from them. As difficult as they are, there will always be lessons in every situation. Just like when you lose in any sport you choose, you need to learn from them to be smarter and stronger the next time around.
Harvard Business Review shares that this is a tough step since looking at failures is an unpleasant exercise. Looking back at past mistakes might lead to lower self-esteem if you do not know how to handle it well. This is one of the reasons why most people choose to overlook the challenges in life. But when it comes to your finances, these hard money lessons can teach you to be better money managers in the future.
This pandemic is undoubtedly a tough time for a lot of people. It closed down businesses which led to imminent job loss for a lot of people. Others are on furlough without any definite date when they will get back to work. Some are still able to work on shorter shifts or fewer days in the week. If you are willing and open, here are some of the financial lessons that this pandemic has taught a lot of people. It might help you improve your own finances as well.
Create a comprehensive household budget
Hard money lessons are often crippling when they happen to anyone but you need to look at the lessons it shows you. These are the learning curves you need to take in to better manage your finances in the future. One of the biggest lessons this health crisis has shown in terms of money management is having a comprehensive household budget.
Business Wire shares that a survey revealed that as 81% of Americans own up to being unfit financially, 69% of them do not have any form of a household budget. At a time when the health crisis has deeply impacted household finances, having a comprehensive budget can help you make necessary adjustments as you navigate through your financial difficulties.
If you do not have any form of budget, start with a simple one. Remember that the simpler it is, the easier it can be to stick to it. Creating a budget and following it are two different things. One column for your income and another for your expenses can be a great start. Just make sure that your income covers all your expenses as you start balancing your budget.
Create an alternative source of income
One of the hard money lessons you might have come across during this health crisis is the loss of income. In some cases, your earning ability is impacted in a way that you are only able to bring in a fraction of what you used to earn. This can put your budget into a tailspin straight into the red as you fail to meet all your payments and expenses.
One of the key learnings is the need to diversify your income sources. Take your investments for example. A lot of experts will remind you not to put all your interests in one basket. The reason is that it helps you offset losses and diversify gains. You can use the same approach when talking about your income.
It is always a good place to start with something you love to do and turn it into an income positive hobby. You can also choose to learn a new skill and explore earning opportunities in that industry. It is also possible to look at in-demand skills so you can focus your time and energy on that. This increases your chances of landing a side hustle at this time.
Hard money lessons include financial preparation
This health crisis caught a lot of people off-guard. There were reports of a virus but it was on the other side of the world. But it eventually came to the country and affected millions of people. It spread out infecting and taking the lives of people. The virus overwhelmed the healthcare facilities that stay at home orders were handed down. All in a bid to slow down the rate of infection and keep people safe.
As a result, a lot of businesses had to close down and let go of a lot of people. This led people to start dipping into their reserve funds. The question now is if people had them and how reliable their emergency funds were. Another issue is the access people had on their emergency fund. How quickly can they get the money they need.
These all form part of financial preparation for a rainy day. The need to have a quick-access fund in case of emergencies is an important part of your finances. More than the coverage and staying out of debt, it also helps you manage stress. Knowing that you have extra funds you can use in case of emergencies can lower down your financial stress.
Your mental health is important
These are trying times and as you look at hard money lessons, your mental health also comes into play. The more you think about money, the more stressful it will be especially if you are going through a tough situation. Add the fact that the health crisis is still ongoing and that can put a lot of strain on your mental health.
You have to understand that your mental health plays a crucial part in the way you live your life. When you take care of your mental health, you can feel good and this can give you that energy to look for ways in improving your finances. If it is the other way around, you might start to feel depressed and not find the need to better your situation.
Your mental health matters in the middle of this pandemic. There are many ways to manage your mental health. Taking care of your body is one of them. Finding time to exercise and eat the right kinds of food will be a big boost. Choosing to focus on the positive areas in your life can also guard against negative thoughts. You should also make it a point to work on the things you can control than lose a lot of time trying to change areas you have no power over.
This pandemic will teach hard money lessons to people from all walks of life regardless of status in society. It is up to you if you are going to take those lessons and learn from them or be depressed with the way things are going. It is always a good idea to try and become a better version of yourself from the hard lessons life throws your way. You cannot control these situations but you can choose how you react to it.